HCPI/CO Springs Ltd. Partnership v. El Paso County Board of Commissioners.

2024 COA 82. No. 23CA1226. Property Tax—Residential Property—Residential Improvements—Rehabilitation Hospitals.

August 1, 2024

Encompass Health Rehabilitation Hospital of Colorado Springs (rehabilitation hospital), owned by HCPI/CO Springs Ltd. Partnership (HCPI), provides rehabilitation services to patients following various injuries, the onset of Parkinson’s disease, or other complex neurological or orthopedic conditions with the goal of returning each patient to “independent living.” The El Paso County Board of Commissioners (county) classified the rehabilitation hospital as commercial property for the 2018 tax year. HCPI petitioned for an abatement, arguing that the rehabilitation hospital should have been classified as residential property. The county denied the petition. HCPI then appealed the commercial classification to the Board of Assessment Appeals (BAA), which classified the rehabilitation hospital as residential property.

On appeal, the county argued that the BAA erred by classifying the rehabilitation hospital as residential property, maintaining that the rehabilitation hospital is not designed for use predominantly as a place of residency. Residential real property is statutorily defined to include residential land and residential improvements. And under CRS § 39-1-102(14.3), residential improvements are “a building, or that portion of a building, designed for use predominantly as a place of residency . . . .” Here, the rehabilitation hospital was constructed and intended to be used as a rehabilitation hospital, not as a place of residency. Therefore, the BAA erred by classifying the rehabilitation hospital as residential property for tax purposes.

The order was reversed and the case was remanded for further proceedings.